#1 issue is that the extensions are all written in TypeScript and run in the background. When I click to go to a definition, rename, run, or even save, I get that "progress bar" and it takes at least a second. A lot of extensions are also buggy. Vs a "real" IDE like IntelliJ or Xcode, which does those operations almost instantly with significantly less bugs.
If VSCode isn't a "real" IDE, then it competes with other text-editors like Notepad++, Vim (not counting advanced versions like Spacemacs), etc. But those are way faster and less cluttered because text editing is all they try to do.